The Modi government is set to bring much-needed relief to taxpayers by launching the Vivad se Vishwas 2.0 scheme on October 1, 2024. Announced in the 2024-25 Union Budget, this initiative aims to resolve pending direct tax disputes, providing an easier and faster way for taxpayers to settle their issues with the tax department without going to court.
A New Approach to Tax Dispute Resolution
The Vivad se Vishwas 2.0 scheme is designed to simplify and streamline tax dispute resolutions, enabling quicker settlements. Disputes relating to 2.7 crore direct tax demands worth nearly ₹35 lakh crore are currently pending at various legal forums. This scheme will allow taxpayers to resolve their disputes by paying only the disputed tax amount, without worrying about interest or penalties.
The Finance Ministry has confirmed that this scheme will come into effect from October 1, and taxpayers with ongoing disputes will have a chance to settle their matters with ease. The government hopes that this will not only reduce the burden on courts but also increase tax revenue while building trust between the tax authorities and the public.
Why the Vivad se Vishwas Scheme Matters
The primary goal of this scheme is to reduce litigation and simplify tax processes. Tax disputes often get stuck in legal battles, which can take years to resolve. This not only causes financial strain but also impacts business operations and leads to unnecessary stress for taxpayers. The Vivad se Vishwas 2.0 scheme provides a way for both sides to resolve disputes at the tax forum level, avoiding lengthy court procedures.
Under this scheme, taxpayers can settle their disputes by paying the disputed amount, and in return, they receive exemptions from penalties and interest. By reducing the complexities involved in legal tax cases, the government hopes to make the tax system more transparent and fair.
Benefits of the Scheme for Taxpayers
The biggest advantage of this scheme is that it allows taxpayers to pay only the disputed tax without any extra burden of interest or penalties. The identity of taxpayers who avail themselves of the scheme remains confidential, which builds trust between the taxpayer and the government.
Another important aspect of the Vivad se Vishwas 2.0 scheme is that it covers a wide range of disputes, including those involving businesses. Business owners who have tax disputes can also take advantage of this scheme to settle their cases and move forward with their operations.
Additionally, cases involving amounts less than ₹5 crore that were detected in a tax raid are also eligible for resolution under this scheme. However, if a case has already been taken to court and a verdict has been passed, the taxpayer cannot avail of the benefits of the scheme.
Success of the Previous Vivad se Vishwas Scheme
The first version of the Vivad se Vishwas scheme was launched in 2020 to settle direct tax disputes. The scheme was a major success, with around one lakh taxpayers taking advantage of it. The government collected approximately ₹75,000 crore in taxes through the initiative, reducing a significant number of pending cases.
With the introduction of Vivad se Vishwas 2.0, the government aims to build on this success by continuing to reduce litigation and providing an easier route for taxpayers to settle their disputes.
As the new scheme rolls out, it is expected to bring further relief to the taxpayers while helping the government collect more revenue and reduce the backlog of cases pending in the courts.
